VOL. 113 | NO. 88 | Monday, May 3, 1999
Mid-America Apartment Communities
first quarter earnings
Mid-America Apartment Communities reported funds from operations of 73 cents per share for the first quarter, compared to 75 cents per share for the comparable period a year earlier.
``We have previously emphasized the drag on current earnings caused by a significant development pipeline. Generally accepted accounting principles prevent us reporting any current earnings from our construction and development activity. We entered the first quarter with a record amount of construction in process, and during the quarter completed a record number of apartments,'' said George Cates, president and chief executive officer of Mid-America Apartment Communities.
``We are confident that (as they did last year) the newly added development assets will meet our return on investment criteria and add to shareholder value. Despite the cost to current earnings, we have laid the groundwork for much higher FFO by putting in place $140 million of new high quality assets over the past 18 months. The earnings contribution of these new apartments is rising rapidly as the leasing season gathers momentum.''
On the operating side of the business, January and February occupancies were weaker than the prior year comparable months, averaging 93.5 percent. A solid recovery occurred in March, with occupancy ending at 94.0 percent. This was, however, insufficient to overcome entirely the earlier weakness. For the quarter, revenue per unit was up 1.8 percent versus the prior year quarter, a combination of a 4.4 percent increase in average rate per unit and a 0.6 percent drop in occupancy to 94.0 percent. On a same store basis, ARU increased by 2.7 percent while occupancy slipped 0.5 percent to 94.5 percent.
``We've said for the past couple of quarters that operations are getting tougher. Our markets are essentially in balance but showing little robustness, some part of which is seasonal. We expect steady but modest operating improvement throughout the remainder of the year, and we expect improvement in the rate of
revenue growth and occupancy and have identified other tangible efficiencies which will be achieved
later in the year,'' said Eric Bolton, president and chief operating officer.
``We expect occupancy to continue to improve as we enter our stronger summer leasing season. While experiencing increasing pressure from new development in several of our markets, we continue to exceed overall market occupancy and rent increase norms in those markets. We are also encouraged by the continued drop in resident turnover, now 6 percent down even from last year's strong performance.''